Girona business insolvencies up 39% in 2013

This year has seen a big jump in the number of businesses in Girona going bankrupt, with 110 companies going to the wall up to the third quarter, representing a year-on-year increase of 39%. The increase in business insolvencies for Spain as a whole is much lower, at 20.4%.

Most businesses in trouble have been trading for more than a decade with up to 20 employees and have folded due to the pressures of the ongoing economic crisis, which the country has endured for five years now with little sign of any real improvement in the short term. Typically these companies have little chance of accessing new finance, are unable to further restructure, and may be affected by customer insolvency, according to reports.

I also wonder whether it is attributable to the economy having turned the corner. Although counterintuitive, it is an observed phenomenon that as the economy picks up after a recession many companies fold as they don’t have the cashflow to deal with new orders. Orders mean expenditure on materials, manpower and equipment and as these companies have stripped back as far as they can and have little cash, fresh orders are actually a bullet in the head rather than the good news they first appear.

Source: Diari de Girona

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